The Sustainability Question: Payout Ratio and Profitability

To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-04-30, First Trust Inter Dur Pref& Income Fund's dividend payout ratio is 0.00, which may raise concerns about the sustainability of the dividend. First Trust Inter Dur Pref& Income Fund's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks First Trust Inter Dur Pref& Income Fund's profitability 2 out of 10 as of 2023-04-30, suggesting that the dividend may not be sustainable. The company has reported net profit in 3 years out of the past 10 years.

Growth Metrics: The Future Outlook

To ensure the sustainability of dividends, a company must have robust growth metrics. First Trust Inter Dur Pref& Income Fund's growth rank of 2 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.

Next Steps

In conclusion, while First Trust Inter Dur Pref& Income Fund offers an attractive dividend yield and has shown impressive five-year growth rates, the sustainability of its dividends is uncertain. The low profitability and growth ranks, coupled with a dividend payout ratio of 0.00, may indicate potential challenges in maintaining its dividend payments. Investors should conduct thorough due diligence and consider the company's long-term growth prospects, financial health, and market conditions before making investment decisions. For those seeking to diversify their portfolio with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener as a valuable tool.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.

This article first appeared on GuruFocus.